Local equities erase early gains to turn negative

Local equity benchmarks erased all the gains to turn negative in morning session, with Sensex and Nifty falling more than 86 and 25 points, respectively, as Manufacturing PMI drops to 2-year low in October. The factory activity growth hit a two-year low in October as new orders and output rose at a slower pace, dragging business confidence to its weakest since early 2017. Energy, Oil & Gas and IT counters witnessed notable losses, while Realty and Telecom sectors edged higher. Some pessimism also came with a governments’ data which highlighted that the output of eight core industries in September contracted to a low of (-) 5.2 per cent, due to a decline in output of coal, crude oil, natural gas, cement, and electricity. Traders took note of a report that year-on-year growth in the Centre’s total budgetary expenditure rose from (-) 11% in June to 34% in September; spending grew 28% in Q2, against just 2% in Q1. Besides, top American think tank reported that India’s growth is in barely positive territory, noting that several key indicators are not just slowing down, but in absolute decline.

On the global front, Asian markets were trading mixed but about the China-US trade talks returned to the fore after a report said Beijing officials had raised doubts about the chances of a long-term deal. Back home, a report stated that India has lost a case filed by the US at the WTO against domestic export incentives as the dispute settlement panel concluded that these schemes are inconsistent with the international trade norms.

The BSE Sensex is currently trading at 40042.90, down by 86.15 points or 0.21% after trading in a range of 40036.65 and 40283.30. There were 12 stocks advancing against 19 stocks declining on the index.

The broader indices were trading in green; the BSE Mid cap index gained 0.24%, while Small cap index was up by 0.42%.

The top gaining sectoral indices on the BSE were Realty up by 1.23%, Telecom up by 0.95%, Healthcare up by 0.53%, Basic Materials up by 0.39% and BANKEX was up by 0.35%, while Energy down by 1.26%, Oil & Gas down by 1.26%, IT down by 0.77%, Consumer Durables down by 0.56% and PSU was down by 0.50% were the top losing indices on BSE.

The top gainers on the Sensex were IndusInd Bank up by 3.70%, Tech Mahindra up by 1.78%, Tata Steel up by 1.34%, Sun Pharma up by 1.20% and ITC was up by 1.05%. On the flip side, Yes Bank down by 5.11%, TCS down by 2.14%, Mahindra & Mahindra down by 1.67%, Tata Motors down by 1.41% and Reliance Industries was down by 1.18% were the top losers.

Meanwhile, the growth of eight core infrastructure industries contracted massively by 5.2% in September 2019, as compared to same period of last year, due to a decline in output of coal, crude oil, natural gas, cement, and electricity. It had expanded by 4.3% in September last year. According to data released by the ministry of Commerce and Industry, the combined Index of eight core industries stood at 120.6 in September, 2019, which was 5.2% lower compared to the index of September, 2018. Its cumulative growth during April to September, 2019-20 was 1.3%. The Eight Core Industries - coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity - comprise 40.27% of the weight of items included in the Index of Industrial Production (IIP).

Among eight core sectors, Coal production having 10.33% weight declined by 20.5% in September, 2019 over September, 2018, and its cumulative index decreased by 3.5% during April to September, 2019-20 over corresponding period of the previous year. Petroleum Refinery production having 28.04% weight fell 6.7% in September, 2019 over September, 2018, and its cumulative index dropped by 2.0% during April to September, 2019-20 over the corresponding period of previous year.

The Natural Gas production having 6.88% weight declined by 4.9 percent in September, 2019 over September, 2018, and its cumulative index was down by 2.0% during April to September, 2019-20 over the corresponding period of previous year. Steel production having 17.92% weight decreased by 0.3% in September, 2019 over September, 2018 while its cumulative index surged by 8.5% during April to September, 2019-20 over the corresponding period of previous year. Electricity generation having 19.85% weight fell 3.7% in September, 2019 over September, 2018 while its cumulative index increased by 3.6% during April to September, 2019-20 over the corresponding period of previous year.

Cement production having 5.37% weight declined by 2.1% in September, 2019 over September, 2018 while its cumulative index increased by 0.7% during April to September, 2019-20 over the corresponding period of previous year. Crude Oil production having 8.98% weight declined by 5.4% in September, 2019 over September, 2018 and its cumulative index fell by 6.0% during April to September, 2019-20 over the corresponding period of previous year. However, fertilizer production having 2.63% weight surged by 5.4% in September, 2019 over September, 2018, and, its cumulative index increased by 1.1% during April to September, 2019-20 over the corresponding period of previous year.

The CNX Nifty is currently trading at 11851.80, down by 25.65 points or 0.22% after trading in a range of 11843.35 and 11918.30. There were 21 stocks advancing against 28 stocks declining, while 1 stock remain unchanged on the index.

The top gainers on Nifty were Zee Entertainment up by 5.95%, Bharti Infratel up by 4.24%, IndusInd Bank up by 3.44%, Tech Mahindra up by 1.87% and JSW Steel was up by 1.80%. On the flip side, Yes Bank down by 5.54%, IOC down by 3.47%, TCS down by 2.04%, Mahindra & Mahindra down by 1.76% and BPCL was down by 1.43% were the top losers.

Asian markets were trading mixed; Hang Seng increased 122.69 points or 0.46% to 27,029.41, Shanghai Composite gained 21.41 points or 0.73% to 2,950.47, Taiwan Weighted strengthened 13.86 points or 0.12% to 11,372.57 and KOSPI rose 8.27 points or 0.4% to 2,091.75.

On the other side, Straits Times trembled 0.56 points or 0.02% to 3,229.32, Jakarta Composite lost 23.74 points or 0.38% to 6,204.58 and Nikkei 225 was down by 103.88 points or 0.45% to 22,823.16.